Legal feud sheds light on Ontario Convention Center scandal

ONTARIO >> More than a year after four employees lost their jobs in a financial flap at the Ontario Convention Center, a flurry of lawsuits suggests top officials there were misusing convention center cash.

Court documents include allegations of fiscal improprieties at the center including the unauthorized leasing of a company vehicle, unauthorized payroll and cash advances, inappropriate use of the company’s purchasing power to buy products for personal use and the authorization and the purchase of capital items without proper bidding process, all totaling more than $100,000 in apparently misappropriated or misused funds.

The documents are related to lawsuits filed by two former employees suing Pennsylvania-based SMG World, which operates the center under a contract with the city of Ontario. An audit commissioned by SMG more than a year ago has never been released, and even city officials claim they haven’t seen it. Neither the city nor SMG has offered any detail on what happened at the convention center, other than to say there were violations related to business conduct, policy and procedures.

SMG has also declined comment on the lawsuits or questions involving the allegations of improprieties, citing the pending litigation.

“As of matter of company policy, SMG does not comment on matters under litigation, particularly those involving former employees,” said Steven Kroll, outside counsel for SMG.

The two former employees, both alleging they were wrongfully terminated, claim the wrongdoing was by former CEO and President Bob Brown, who resigned amid the scandal.

In addition to Brown, SMG reported last year that two other managers resigned, and a third employee was fired.

In court filings, Clemmie Taylor, former director of operations, claims he was forced to resign, and Sue Dang, director of finance and administration, says she was wrongfully terminated after tipping off SMG to the misconduct at the center.

Both allege it was Brown who misused convention center funds, obtained loans from SMG and entered into lease agreements for vehicles without the company’s permission. In a lawsuit filed in June, Dang claims Brown acted without company approval or knowledge when he purchased company equipment, used company money, funds and credit and opened bank accounts outside SMG’s control.

Dang claims SMG acted improperly when it fired her, after she reported Brown, and then “negotiated the terms of (Brown’s) separation from the company and allowed defendant, Bob Brown, to resign and provided him with monetary and other benefits,” according to the suit filed by Dang.

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Reached last week, Brown declined to comment on the allegations against him or the circumstances of his departure from SMG.

In a cross complaint, SMG argues that Dang “acted with malice, fraud and oppression, and in reckless disregard of SMG’s rights,”

SMG also contends that Dang’s actions resulted in a misappropriation of funds in excess of $100,000 and asks the court to dismiss the case and order Dang to pay SMG’s legal fees and any other costs associated with the case.

Financial misconduct

Legal documents show SMG became aware of alleged “financial and accounting improprieties” on June 12, 2012, and launched an internal investigation.

Less than a month later, on July 6, 2012, Taylor was placed on a paid administrative leave and Dang’s employment was terminated. She was given the option of resigning and was fired when she refused, according to SMG’s counter-suit.

About the same time, Brown and Delana Grande, human resources manager, were not seen at the Convention Center.

On July 18, 2012, Taylor was called in to meet with SMG Senior Vice President Bob McClintock. Taylor claims he was fired for “failing to follow business conduct policy.”

But a letter from McClintock to Ontario City Manager Chris Hughes led the public to believe that Taylor, along with Brown and Grande, had resigned.

In the letter, McClintock stated that Brown “thwarted normal SMG control procedures.

Taylor claims in his lawsuit that he was placed on leave by SMG because he failed to report that Brown had purchased a $20,000 barbecue pit for another facility and for giving the former CEO a vendor’s contact information for an appraisal.

As director of operations, Taylor supervised various departments, negotiated with vendors for events and helped prepare the internal operations budgets but did not have the authority to approve or reject any of Brown’s transactions.

Dang claims she was fired because she did not report Brown’s “dishonest acts and concealment,” even though she attempted to alert SMG officials to some of Brown’s actions.

In her June 6 lawsuit, Dang also provided additional information about what was happening at the Convention Center, including allegations that Brown was using Convention Center funds and credit without company approval or knowledge.

Before her termination, Dang had begun to question some of Brown’s actions and sought the authorization from a fellow SMG colleague based in El Paso, Texas.

Her actions led to the internal investigation at the Convention Center, and her firing was retaliatory, she claims.

“SMG performed an internal audit which confirmed the acts and omissions that were dishonest and involved concealment were done by (SMG’s) CEO, Bob Brown,” according to the suit filed by Dang.

SMG, in its cross-complaint against Dang, contends her firing was justified as she was involved in the wrongdoing herself.

After being let go, Dang appealed to the California Unemployment Insurance Appeals Board in Rancho Cucamonga a decision that would have disqualified her from receiving unemployment benefits.

In those documents, Dang said she discovered additional information as to why SMG had terminated her employment, which included an incident when Brown installed video-conferencing equipment in his home to allow him to continue to work while he was on a medical leave, even though he never got approval from SMG. The equipment ultimately was turned over to the Convention Center once Brown returned to work.

Another instance was when Brown opened a bank account under the organization, Ontario Hospitality Group, which never was associated with the company. Money from the Convention Center was never transferred into the account, according to the claim filed by Dang.

Both Taylor and Dang, in their lawsuits, claim the issue has caused them emotional distress and financial damages.

Dang has asked for $226,500 to settle her case.

SMG’s documents, filed in response to the complaints by Dang and Taylor, sheds further light on possible wrongdoing at the Convention Center, including allegations of embezzlement and cash advances.

Aftermath

SMG manages activities at the Convention Center on behalf of the city of Ontario, which owns the facility.

Ontario officials have been tight-lipped about the scandal, claiming that they are confident no public money was misused.

“It’s an internal issue and not ours,” said Ontario Mayor Paul Leon.

“I’ve never been privy to the issues that they’ve mentioned,” Leon said, referring to the lawsuits. “That’s between them, and we are treating it just like we would with any other contractor.”

Leon praised the Convention Center’s new CEO, Michael Krouse.

“Michael Krouse has done a very good job repairing whatever question might have arisen,” Leon said. “He understands the needs of this community.”

While the facility is owned by the city, SMG has been responsible for booking events to fill the 225,000 square feet of exhibit and meeting space for the past 10 years.

Shortly after his departure, Brown resurfaced as president/CEO of TSG Consulting Inc., a consulting firm that specializes in event planning.

About the Author

Liset covers the cities of Upland, Claremont, Rancho Cucamonga as well as LA/Ontario International Airport. Reach the author at liset.marquez@langnews.com
or follow Liset on Twitter: @JournaLiset.